That sounds terrible. You're lucky you didn't knit the entire blanket out of that yarn. It least the main portion still is in good shape.

Isn't that the truth!!! Because of the cost of the Dream I wouldn't have used it for the body anyway, but still. Can you even imagine? I'm getting ready to sort through my stash now to see what else I have I can use. I'm almost afraid to use anything else other than regular acrylic worsted weight yarn now. :(

Not sure if this will help but just last night I was reading an article in my Knit Simple magazine and it suggested putting your item in the freezer for a time to assist with unraveling fuzzy yarn. It said the fibers when stiff are not able to tangle as much.

If I had read this two nights earlier I could have saved a cashmere scarf I was working on, I pulled to hard trying to unravel and broke the yarn....causing myself a bigger mess.

I'm so sorry this happen on such a special project; I know how upset you must be.